5 things to know about Conditional Payments and how Verisk can help

April 22, 2025 / 8 min read

A major part of Medicare Secondary Payer (MSP) compliance involves the Centers for Medicare and Medicaid’s (CMS’s) conditional payment recovery process.^[1] In general, through this process CMS seeks reimbursement for payment it has made for which another party is responsible under the MSP statute.^[2] To give a general idea of the scope of CMS’s activities in this area, in fiscal year 2024 (October 1, 2022, through September 30, 2023), the most recent year for which data is available, the Commercial Repayment Center (CRC) collected $253.6 million in conditional payment reimbursement on behalf of CMS, plus an additional $47.5 million in Treasury collections.^[3]

In the big picture, as discussed below, failure to properly and timely address CMS conditional payment claims can result in significant liability for insurers, claimants, and other parties. Accordingly, understanding CMS’s conditional payment process is critical to stay compliant and reduce risk as part of claims handling and settlement.

Toward this goal, the author outlines below five key points regarding how CMS’s recovery process works, considerations to improve your compliance practices, and how Verisk can help, as follows:

1. CMS conditional payment claims relate to claimants enrolled in Medicare Parts A and/or B.

To start, when an individual becomes entitled to Medicare, they have several Medicare plan options. They may choose to enroll in Original (or Traditional) Medicare, which includes Medicare Part A (Hospital Insurance) and Part B (Medical Insurance).^[4]Alternatively, a Medicare beneficiary can opt to enroll in a Medicare Advantage plan (known as Medicare Part C) plan, which are Medicare plans provided by private companies.^[5] Medicare beneficiaries who also want prescription drug coverage can purchase a Medicare Part D Prescription Drug Plan, which are also run by private insurance companies.^[6]

Regarding Medicare Secondary Payer (MSP) compliance, knowing the type of Medicare program the claimant is enrolled is important when it comes to addressing Medicare recovery claims. Further, in general, it is important to note that a beneficiary may change Medicare plans at various times during the year as part of Medicare open enrollment periods.^[7]Thus, it is possible that a claimant’s Medicare plan enrollment may change during the life of a claim, thereby presenting the potential for different types of Medicare recovery claims.

On this point, CMS’s conditional payment process (which is the subject of this article) relates to claimants enrolled in Original Medicare (Parts A and B).^[8] In contrast, Medicare Advantage Plans and Prescription Drug plans have their own separate recovery processes regarding claimants enrolled in those plans. The author will address Medicare Advantage and Part D recovery in a forthcoming article. In the interim, we will focus on CMS’s conditional payment process in this article.

2. CMS has strong and broad recovery rights.

CMS has strong recovery rights against primary payers (and other parties) under the MSP statute and failure to address and resolve conditional payments could result in significant liability.^[9] For example, CMS can seek conditional payment recovery from the claimant, primary plan, claimant’s attorney, and other parties when the primary plan has “demonstrated responsibility” as defined under the MSP.^[10]Under the MSP, a “primary payer's responsibility for payment may be demonstrated by (1) A judgment; (2) A payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary payer or the primary payer's insured; or (3) By other means, including but not limited to a settlement, award, or contractual obligation.”^[11]

If Medicare’s conditional payments are not reimbursed, CMS has several potential recourses. For example, CMS may pursue the primary payer, claimant, and other parties for reimbursement.^[12]CMS can also charge interest if reimbursement is not made within 60 days of a demand for reimbursement.^[13]In addition, CMS may also refer unresolved debts to the Department of Treasury for collection.^[14]CMS can also potentially seek “double damages” if its recovery claim is not reimbursed.^[15]

3. There is a connection between Section 111 reporting and CMS’s recovery process.

As more fully detailed in the author’s recent article, CMS uses the information that it receives from a Responsible Reporting Entity’s (RRE’s)^[16]Section 111 reporting to drive its conditional payment recovery process. For instance, when an RRE reports its Ongoing Responsibility for Medicals (“ORM”) or a Total Payment Obligation to the Claimant (“TPOC”), CMS uses those reports to initiate recovery for conditional payments. When an RRE reports ORM, CMS’s stated workflow is to initiate conditional payment recovery against the primary payer using the Commercial Repayment Center (CRC).^[17] The CRC then utilizes the information provided by the RRE’s Section 111 reporting to identify medical treatment the CRC believes is the primary payer’s responsibility and seek reimbursement.^[18]

In contrast, when CMS receives a TPOC report, CMS uses that information to seek reimbursement from the claimant using the Benefits Coordination and Recovery Center (BCRC).^[19]The BCRC will search Medicare’s system for any medical treatment the BCRC believes to be related to the claim and will seek reimbursement from the claimant for any identified conditional payments.^[20]

In addition to initiating recovery, Section 111 reporting data helps CMS, the CRC, and the BCRC determine the conditional payment recovery period, the amount of money available for recovery, and the medical treatment that may be related to the claim. The CRC’s ORM based recovery will seek reimbursement from the date of incident through the ORM termination date,^[21] while the BCRC will seek reimbursement for medical treatment from the date of incident through the date of the TPOC.^[22]Of note, CMS also uses the International Classification of Diseases, Ninth/Tenth Revision, Clinical Modification (ICD-9/ICD-10) diagnosis codes (“ICD codes”) reported with an ORM or TPOC record to identify medical treatment related to the claim.^[23]

4. You can dispute CMS claims!

It is important to keep in mind that parties may challenge CMS’s conditional payment recovery claims. This is particularly important to note since, from the author’s experience, CMS’s claim often times contains charges which may be disputed. On this point, both the BCRC^[24]and CRC^[25]have established processes by which pre-demand conditional payment recovery can be disputed. Once the BCRC or CRC issues a demand, the individual or entity that receives the demand can appeal the demand using CMS’s formal appeals process.^[26] In general, the CMS administrative appeals process consists of five levels, and parties should ensure they are meeting all filing requirements, including any applicable appeal timeframes, when filing an appeal.^[27]

As part of this process, CMS indicates that only the amount or existence of the debt may be appealed and recognizes several common types of appeals, including but not limited to, unrelated treatment, non-covered services, duplicate primary payments, benefits denied or revoked, and termination of ORM.^[28]

It is also important to note that in situations where CMS is pursuing recovery from the claimant, the claimant also has the right to request that CMS “waive” the demand amount, in full or in part.^[29]In order to obtain a waiver, the claimant must prove, in general, that they were not at fault for the conditional payments and that reimbursing CMS would cause financial hardship or be unfair.^[30]

5. Proactive claims strategies are key to address and resolve CMS recovery claims.

Given the complexities of the conditional payment process, it is typically recommended that parties take a proactive approach to ensuring CMS issues are addressed in a timely manner. Much of the correspondence issued by the BCRC^[31] and CRC^[32] is time sensitive, making it crucial that the parties obtain and respond to correspondence in a timely fashion. This allows the parties time to review CMS’s recovery letters, prepare any relevant challenges, and submit disputes and appeals within the specified timeframes.

Similarly, as CMS uses ORM and TPOC reporting to trigger its recovery process, parties should have plans in place to address CMS recovery matters. With the CRC’s ORM based recovery, RREs should anticipate receiving CRC recovery correspondence throughout the life of the claim, potentially including multiple recoveries throughout the period of ORM.^[33] Understanding that the BCRC’s process includes recovery from the claimant at the time of settlement,^[34] it is generally recommended that the parties obtain an interim conditional payment amount from the BCRC prior to settlement and have a plan in place as part of the settlement to ensure the BCRC’s demand is resolved.

How Verisk Can Help

Verisk offers several different Medicare recovery services that can help you address CMS conditional payment claims, including our standard Medicare conditional payment service and our Treasury service. We also offer our popular CP Link® program which provides a proactive approach to Medicare recovery claims that leverages your Section 111 data to initiate the conditional payment process. In general, CP Link helps speed up the conditional payment process by identifying potential conditional payment claims through Section 111 data, helps reduce adjuster time, and facilitates a holistic compliance approach to address conditional payment claims. Through our experienced team, we consistently deliver extraordinary savings for our customers. For example, in 2024, we saved our clients over $140 million in conditional payments and nearly $1 million in Treasury savings.

Please do not hesitate to contact the author if you have any questions regarding CMS’s recovery process or if you would like to learn more about Verisk’s services.

[1] Under the MSP statute, the terms “conditional payment” is defined as follows: “Definitions.

In this subpart B and in subparts C through H of this part, unless the context indicates otherwise—

Conditional payment means a Medicare payment for services for which another payer is responsible, made either on the bases set forth in subparts C through H of this part, or because the intermediary or carrier did not know that the other coverage existed.” 42 C.F.R. § 411.21.

[2] On this point, CMS’s recovery rights, in main part, are outlined in 42 U.S.C. § 1395y (b)(2)(B)(ii). This statutory section, states in full, as follows: “Subject to paragraph (9), a primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means. If reimbursement is not made to the appropriate Trust Fund before the expiration of the 60-day period that begins on the date notice of, or information related to, a primary plan’s responsibility for such payment or other information is received, the Secretary may charge interest (beginning with the date on which the notice or other information is received) on the amount of the reimbursement until reimbursement is made (at a rate determined by the Secretary in accordance with regulations of the Secretary of the Treasury applicable to charges for late payments).”

[3] Annual Report on the Medicare Secondary Payer (MSP) Commercial Repayment Center (CRC), Report to Congress, Fiscal Year 2023 (July 2024), Section 4.3. It is important to point out that the CRC handles conditional payment recovery for group health plans (GHPs) as well as non-group health plans (NGHPs), where recovery is sought against the primary payer. Unfortunately, the Report to Congress does not contain a separate breakdown of statistics between GHP and NGHP recovery. Additionally, the author has not been able to locate any reports on recovery by the Benefits Coordination & Recovery Center (BCRC) where recovery is sought against claimant Medicare beneficiaries in NGHP claims.

[4] Medicare & You 2025, The official U.S. government Medicare handbook, page 10.

[5] Id.

[6] Id. at 9.

[7] Id. at 9.

[8] https://www.cms.gov/medicare/coordination-benefits-recovery/overview/non-group-health-plan-recovery

[9] See n. 2 above.

[10] 42 U.S.C. § 1395y (b)(2)(B)(ii). See also 42 C.F.R. § 411. 24 (e) which states as follows: “Recovery from primary payers. CMS has a direct right of action to recover from any primary payer.” Id. In addition, 42 C.F.R. § 411. 24 (g) states as follows: “Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” Id.

[11] 42 U.S.C. § 1395y (b)(2)(B)(ii). Of note, under the MSP, the term “primary payer” is defined as follows: “Primary payer means, when used in the context in which Medicare is the secondary payer, any entity that is or was required or responsible to make payment with respect to an item or service (or any portion thereof) under a primary plan. These entities include, but are not limited to, insurers or self-insurers, third party administrators, and all employers that sponsor or contribute to group health plans or large group health plans.” 42 C.F.R. § 411. 21.

[12] 42 U.S.C. § 1395y (b)(2)(B)(ii). See also, 42 C.F.R. § 411. 24 (g) which states: “Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” Id.

[13] 42 U.S.C. § 1395y (b)(2)(B)(ii).

[14] https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process

[15] 42 U.S.C. § 1395y (b)(2)(B)(iii).

[16] In the Section 111 context, the party obligated to report under Section 111 is referred to as the “Responsible Reporting Entity (RRE).” Very generally, the RREs are insurers and self-insurers but could involve other risk-bearing entities such as self-insurance pools or assigned claims funds depending on the facts. See generally, CMS’s Section 111 NGHP User Guide, Chapter III (Version 7.9, January 6, 2025), Chapter 6.

[17] https://www.cms.gov/medicare/coordination-benefits-recovery/overview/reimbursing

[18] https://www.cms.gov/medicare/coordination-benefits-recovery/insurer-services/nghp-recovery

[19] https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process

[20] Id.

[21]https://www.cms.gov/medicare/coordination-benefits-recovery/insurer-services/nghp-recovery

[22]https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process

[23] CMS’s Section 111 NGHP User Guide (Version 7.9, January 6, 2025), Chapter IV: Technical Information, Chapter 6.2.5, p. 6-10.

[24]https://www.cms.gov/medicare/coordination-benefits-recovery/beneficiary-services/recovery-process

[25] https://www.cms.gov/medicare/coordination-benefits-recovery/insurer-services/nghp-recovery

[26] https://www.cms.gov/medicare/coordination-benefits-recovery/insurer-services/nghp-recovery

[27] While a full review of the appeals process is outside the scope of this article, the five levels of the formal appeals process are: Redetermination, Reconsideration, Administrative Law Judge (ALJ) hearing, review by the Medicare Appeals Council, and judicial review. For additional detail on the appeals process, including filing deadlines, see CMS’ Non-Group Health Plan (NGHP) Applicable Plan Appeals Reference Guide (Version 1.1, July 1, 2024), Chapter 3.

[28] Id, Chapter 4.1.

[29]https://www.cms.gov/medicare/coordination-benefits-recovery/overview/reimbursing

[30] Id.

[31] https://www.cms.gov/medicare/coordination-benefits-recovery/overview/reimbursing

[32] https://www.cms.gov/medicare/coordination-benefits-recovery/insurer-services/nghp-recovery

[33] https://www.cms.gov/medicare/coordination-benefits-recovery/overview/reimbursing

[34] Id.